10AM Hour: NVIDIA Fallout, AI Inflation and OpenAI Wallet

0:00At Janice Henderson, we strive to deliver better outcomes through insight-led investing, innovation for clients, and a partnership approach that's core to our identity. I'm Jessica Lianzini, Head of Fixed Income Client Portfolio Management. I'm passionate about my role in investments. It allows me to partner with our clients, simplify fixed income, and support them in achieving better outcomes for their clients. Janice Henderson, investing in a brighter future together. From the producers of The Traitors, The Circle returns with bigger twists and higher stakes. Contestants compete for popularity without ever meeting.

0:39Some are celebrities, some are regular people, and some are catfishing the competition. And now audience voting will influence the game. You decide who has what it takes to win in The Circle. Watch the Hulu original series The Circle on November 17th, streaming on Hulu and on Hulu on Disney Plus for bundle subscribers. Terms apply. Good. Friday morning. Welcome to Squawk on the Street. I'm Sarah Eisen with Carl Quintanilla and David Faber. We are live as always from Post 9 of the New York Stock Exchange. NVIDIA shares under pressure this morning as investors come to terms with the post-Jensen Huang era.

1:12We'll talk with one expert who says Huang's ouster is bad for NVIDIA but actually good for America. Plus, we'll speak with the CEO of NVIDIA competitor Cerebra Systems jumping this morning after strong results. We'll ask him how Jensen Huang's exit impacts the business. And former National Economic Council Director Gary Cohn joins us as we get another read this morning on inflation. And that's where we'll start. The impact of AI on the broader economy. We got the PPI number today. Good and bad. Good news is it was a little bit cooler than expected. Bad news is it's still a very hot number. And so the Fed has work to do on inflation.

1:48We pulled apart the AI components here of this report. 21%, almost 21.5 % jump in electronic computers and computer equipment prices, which shows you, I mean, the AI infrastructure trade is putting upward pressure on prices because there's just so much demand. 32 almost percent increase in cost for electronic components. So it's not the whole story with inflation. We have higher food prices. We have higher transportation and warehousing prices. But it is a part of the story, which is the AI build-out is creating so much demand for building of data centers that it's driving up prices of some of these components.

2:25And that's, you know, something that the Fed is watching. We've also got some great charts about how consumer adoption is spreading for AI in this economy. Take a look. Consumer Edge Research really put together some nice charts about AI's share of spending and how it has jumped this October compared to last October, compared to the end of 2024. And I mean, adults age 18 through 34, AI share of spending reached approximately 16 basis points in October. Obviously, that's a huge jump. 18 to 34 is the most popular age in terms of share of spending, 14 basis points among those age 35 through 54. So you look at this chart and And you just show, it shows you the mass adoption, but also the spending, because we're really looking at some of the economic impacts as well.

3:14If you look at the share, you know, we're gearing up for Anthropics IPO next week. Anthropics AI spending share has also gained its growing share of consumer spending. If you look, basically, it was 5 % in December 2024. No one had ever heard of it. Nearly 28 % in October 2026. So that's an interesting one to keep in mind because you think of open AI as winning the consumer market and it's half of their business. Anthropic is stronger in enterprise, but it is gaining in terms of spending share for consumers at the moment. I mean, certainly where we were, which was nothing. So we're saying here that 30 % of people's spending is with AI?

3:55So, no, it's 30 % of the share of total consumer spending is AI-related, basically. Captured a growing share of U.S. consumer AI spending. So, basically... I mean, what they're spending on AI. That's the Anthropic chart, right? Yeah. Of consumer AI spending. So, the share... Basically, this is consumer ads. Anthropic has captured a growing share of consumer AI spending. Share of spending across the tracked AI subscription category has jumped from 5 % in December 2024 to now 30 % as they've grown market share, basically. Fascinating. I mean, it's amazing growth. We didn't really even have time this week to get to stocks like United banning bots from buying plane tickets, calling it an FAA risk.

4:40So there will be friction on this front. No, there's for sure as we try to figure out, you know, what the rules of the road are. There's also a great, I just wanted to also show you the AI spend from Ramp, which is a snapshot of the enterprise spending. Also a new peak in October, 1.65 from September. Spend also increased among the top 1 % of spenders. So the top 1 % of firms now spend a median$10 ,200 per employee per month on AI, up from 9%. So these numbers continue to grow, but there's also a lot of wide space for growth ahead. Things to keep in mind. Yeah, well, a lot of questions for Anthropic in terms of pricing and what ultimately it will be.

5:21Obviously, the price per token continues to decline, but will you get more usage? How are they pricing the various models? Can they compete with open source with models that are not quite at the frontier and therefore can be priced at a far lower level? They're still focused on the enterprise. Yeah. Yeah. Well, I have a feeling our next guest has some thoughts on all of this and whether the token prices are worth it. Joining us now at Post 9 is the former director of National Economic Council during President Trump's first term, Gary Cohn. Gary's also former President of Goldman Sachs, and he's currently the vice chair at IBM.

5:54Welcome back. It's good to have you. Thanks for having me. I mean, these numbers that what we're trying to show here is just growing adoption and growing spending on AI and a growing part of the overall economy, right? Growing wallet share in terms of spending on AI products. How do you look at these? How do you look at this? Look, Sarah, no one should deny how important AI has become to us as individuals and to the enterprise. There is no company today that is not using AI for something in the organization. I think we're finding out where the real opportunities for AI are today. We've seen enormous progress in the programming side of AI.

6:32AI can program extraordinarily efficiently. We've seen AI be used really effectively in HR. There's a lot of tasks in HR that individuals don't want to do where AI is really good at doing those tasks. So companies are continuing to push the frontier. But companies are also to the point now where they're being forced to evaluate the return on investment. And the investment is tokens. If I'm buying a million dollars of tokens, am I getting a million dollars of value back? Am I getting two million dollars back? Or am I getting$500 ,000 back? We have seen mixed results of this. I think it's a little bit too early in this journey to make a declaration that we're getting a huge return.

7:12But I think there's too much risk for companies to not try because if it is a real efficiency creator, your competitor will outcompete you if they're more efficient than you are. So what does that mean for Anthropics IPO next week? Well, I think Anthropics IPO is going to be the first bellwether of a pure frontier model. and it's important to say that. Frontier Model. You guys are in the open wait camp. Frontier Model Company. I think it will do very well. I hope it does very well. I think everyone involved in that transaction knows what a bellwether moment this will be. It looks and feels like they are going to price it at an appropriate price, and they are going to price it to trade well initially.

7:58And look, the underwriters can only price it to trade well initially. You know, more and more supply comes on the market. Employees get unlocked relatively quickly. So we'll have to see how it trades. You know, we've seen a lot of IPOs come through here recently that have traded up and traded up dramatically that within six months were below their IPO price. Yeah, there's going to be a lot of stock that comes off lockup over time as well, which can break pressure. I want to get back to what your comments about return on token spending. What is the friction that you think companies are seeing, therefore, that is not allowing them to capture as much value perhaps as might be thought or may ultimately be the case?

8:35David, I think the friction is just the evolution of knowing where tokens really provide value. We've seen a lot of companies just make AI available to their population. And like all of us here, if you tell your employees, go out and use AI and figure it out, people will spend a lot of money on tokens experimenting. And I think not all of the experiments have led to real return on investment. Look, you saw Uber say this two quarters ago. Uber was one of the first companies that came out. Dario came out and said, look, we spend a lot of money on AI. We don't see a return today. Doesn't mean we won't see a return in the future.

9:10And we are seeing more and more companies trying to figure out, how do I get a return on AI? And look, it's really important in these day and age where people's margins are being squeezed, where we're dealing with inflationary pressures, we're dealing with tariffs. Everyone's concerned about their margin and no one wants to pass pricing on the consumer. So there is a hope that AI will make companies more efficient, make the country more productive, will grow the economy, and will be able to grow without price inflation. So does next year, is it a year in which C-suite tells their team, go out and break stuff and let's not fall behind?

9:43Or is it going to be more about watch your budget? I think it's going to be different depending on industries. But it's one of these dilemmas. It's a dilemma that if you're my competitor and you find an efficient frontier with AI and I don't, you're at a superior advantage to me. On the flip side, if you're my competitor and you spend nothing on AI and I spend a lot and don't find efficiencies, I'm at a disadvantage. So I think we're in this sort of walking motion right now. Let's call it where everyone's walking towards where the opportunity is. No one's running. No one's sprinting. And there's also other opportunities in the open model area where people are starting to understand the open model where you can run in your own environment, where you can run at a substantially reduced cost and you have a lot more control over data and information.

10:33And so we're seeing that evolve as well. You know, look, this AI space is highly evolving every day. Every day it's different than the day before. You've been one that's mourning about the overbuild of data centers potentially in this country. So do you think the midterm message, particularly in states like Texas, is a constructive one that we're not going to get as quick? I actually think it is constructive. I think it's forcing everyone to take a deep breath and say, hey, look, if we can't build data centers here, where are we going to build them? Now, look, on the other side, I don't believe that we will stop building data centers in this country.

11:07I think there are states and cities and jurisdictions that want data centers and are sort of rolling out red carpet for data centers. So locations may change, but all of a sudden people are sort of taking a deeper look and trying to understand the data center and the return on it. You know, David said something important a few minutes ago. Token prices continue to go down. If it's a commodity chart, it would be in a bear market. Every week it goes lower and lower. So the assumptions that people made a year ago on token prices was wrong. Now the assumption they made on consumption was wrong, too.

11:43Consumption continues to grow and price continues to go down. So you have to figure out where the intersection of what it costs you to build a data center and where you think token prices are going to be and how much capacity do you have in that data center. And that has to make economic sense. This is going to get to sort of an economic reality of being able to run a business with a margin. There's not going to be unlimited margin in the data center. Is it going to be painful, though, if and when we get there? I mean, given what's going on in the capital markets, not to mention all the debt that's been raised against it and everything else, Gary, one can imagine a scenario in which that doesn't look great, at least for some period of time.

12:20Look, I'm highly concerned about this. I'm highly concerned. And the history would tell you the history of us building out infrastructure in this country would tell us that you do not want to be the first owner. You want to be the second owner. You know, go back to the fiber optic cable networks. You know, we all heard about fiber optic and how important it was to us and how it's going to change our life and how we needed to stream everything. Guess what? They were completely right. We do need to do all that. The problem is when they built it and the companies that built it borrowed so much money to lever up a product that wasn't in full demand at that point that none of them made it.

12:55Whether it was an Enron, a WorldCom, a Global Crossing, we go through the long list of companies that laid fiber optic cable. So that said, today, the second owner is making an enormous amount of money because they bought it at the right price where they could get a really good return on capital. Wait, who's the second owner? The hyperscalers? No. It's anybody who came in and bought them when they were bankrupt. There's a lot of companies that you don't know their name that bought that distressed, distressed asset at pennies on the dollar. And now, based on where the market is, they're making an enormous amount of money owning the fiber.

13:28said for the railroads. I mean, it would be a better analogy. Look, don't bring up Penn Central. On PPI today, I mean, transportation, diesel, freight, is inflation going to be more pernicious than you thought next year? So this is an interesting conversation. So when you look at how inflation is measured, and I always get on here and say this, inflation is measured year over year. So in many respects, it depends what the denominators or what the prior year was. Energy is driving the vast majority of inflation in the system. You know, it's driving transportation, it's driving diesel, it's driving food prices, it's driving all of those core essentials.

14:08So today, the year over year energy price, we're about$30 to$40 higher than we were a year ago. If we have the same price of oil in April, we will have energy deflation. because last year in April, the price of crude oil was over$100. So when you do the year-over-year comparisons of inflation, it's going to change dramatically. And look, this is something that the Fed knows. Kevin Warsh knows this really well. That's why one of these areas, when they know that time is on their side, because the denominator gets higher and higher as we get into the curve. Although you can look at the month-to-month numbers.

14:44They're still hot. I mean, yes, 0.3 % increases on a month. Yeah, they are hot. But that's also part of higher interest rates. And let me take a step back. Last month, we probably had the peaks in a lot of these things, at least the short-term peaks. We had interest rates higher last month. We had oil prices higher last month. We had most of the input costs higher. We've seen a little bit of a turndown both in interest rates and in oil prices. So the data we got today from last month, we may look back and say that was the high point. We may not. We don't know. But the forward calendar of underlying valuations is helpful to the inflationary picture.

15:25Finally, I know you sit on a number of corporate boards, and we've all been watching the NVIDIA scandal play out. And I just wanted to ask your opinion about how the board handled this. So, Sarah, look, it's a great question. I do serve on corporate boards, and I'm advising boards. And, look, the role of the board, so that everyone should know, is to be an advocate and protector of the public shareholders. They're also supposed to be responsible for hiring and firing management and making sure management is executing on their business plan. That is the fundamental responsibility of the board is to oversee.

15:59Did they do that well? So when you get to the NVIDIA situation, I think that board got put into a really bad corner. And the corner they got put into is I'm not 100 % sure, but any board I would be involved in, we would have sat down with the CEO. we would have said, look, level with us. Tell us everything that's going on. We need to know everything. We're happy to work with you. We're happy to fight with you, but we need to know everything. I think the board got put into a precarious position where they did not have full disclosure of the facts. And once a board loses confidence in a CEO to talk to them, talk to them clearly and tell them everything that's going on, I almost believe they have no choice but to terminate the CEO as a fiduciary for the shareholders.

16:48So you think they did the right thing? I think they had no choice. They may not have liked it. They may have tried to figure out, is there a way to skirt around this? But when you hire a third party, very reputable law firm to come in and do an evaluation and that law firm comes in and says, hey, this is what you were told and this is what happened and those two sets don't intersect, the board has a problem. Don't lie to your board, I guess. Moral of the story is don't lie to anyone. How's that? Oh, that's good. Gary, thank you. That's why we turn to you for the wisdom. Gary Cohn, vice chair of IBM.

17:23Thank you. Getting a news alert on OpenAI this morning. Let's get over to Kate Rooney. Morning, Kate. Hey, Carl. Good morning. So OpenAI just announced a new payment feature that lets AI agents make purchases on users' behalf. It's going to be called ChatGPT wallet. So it is for their Dots agent. And OpenAI did this in partnership with Amex, MasterCard, and Visa. So it allows credit card customers to still maintain and use their existing card rewards. OpenAI told us that it's trying to solve one of the biggest pain points for using AI in shopping, which is, of course, paying and checking out. You still need to approve each purchase, but you don't actually need to reenter your card information in all of this.

18:03And guys, cybersecurity, of course, is a massive question. With the rise of all of these agents, OpenAI says that they never actually get the full card details. They use what's known as a payment token, so it's specific to each transaction. The product lead for this told us the goal right now is just to build a great foundation that's safe and overall easy to use. This could eventually be a new revenue stream for this company as they look to go public potentially next year, but right now they're not going to be taking a cut of each transaction. OpenAI has also pushed deeper into AI-enabled commerce, but it's mostly been more around product discovery.

18:36It did have an instant checkout feature at one point, but it pulled back on that. It's initially going to be available for pro subscribers. It is a very limited rollout to make sure things don't go wrong. ChatGPT, for context, has about 1.2 weekly active users at the last count. Not everyone, guys, is on board with this AI agent, Boomyhood United Airlines, this week saying it's going to be blocking agents from booking tickets. Amazon, notably, has also prevented agents from buying things on its platform. So not popular overall. We'll see kind of who signs up for this new agent economy, guys. Because it's not one reason is, Kate, it's not clear who holds the bag if the agents do something wrong, right?

19:15Who's responsible for it? Yeah. Like I remember I spoke to Enrique Louris at PayPal, and he was saying that if they're an intermediary, they could be ultimately on the hook for it, as long as, you know, these agentic shopping services don't bypass them. But otherwise, who is it? Yeah, no, it's such a good question. I mean, liability is still an open question. I think the AI labs would say it's very dependent on the case and the scenario. I mean, Sam Altman has described it as sort of, you know, if a driver drives drunk, you know, that's their fault and not the fault of the AI lab. I mean, very extreme example, in more innocuous things, if it is the technology, then they say it's their fault.

19:51But But there is going to be case law. There's going to be precedent set. And I think from what I'm hearing, it's probably going to play out in the courts. You are going to have an issue with some of these things. They're going to have to set a precedent. But right now, there really are no rules. And there's no clear example of, you know, who holds liability here. Hopefully, it's not something awful that happens. But that's really how people think about it. You know, they have to have something go down to really set the precedent in the courts. OK, Kate, thank you. Kate Rooney, here's our roadmap for you for the rest of the hour.

20:19After the break, is Jensen Wong's exit from NVIDIA actually good for America? That's the case that one tech expert is making. We'll hear why next. Plus, we will look at the widening NVIDIA fallout in Washington, D.C. This is Commerce Secretary Howard Lutnick is called on by lawmakers to testify about chip exports. And we'll talk about what's behind the Microsoft outage that has impacted businesses around the world. Early session lows here. Back to 7510. We're back in a minute. Legacy Credit Scores only look at a brief snapshot in time, and that limited view often leaves millions of qualified credit seekers out of the picture.

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22:18Listeners can get an exclusive 20 % off IXL membership when they sign up today at IXL.com slash 20. Visit IXL.com slash 20 to get the most effective learning program out there at the best price. I love Colette. She sat next to me for a couple of years before she went to NVIDIA. She actually left and went to NVIDIA from Cisco. And I think she's quite capable. She's a real operator. She's the real deal. When I've heard you describe her this week, I actually have been kind of chuckling under my breath because I'm like, that's the Colette that I know. And so I think she's going going to do just great.

22:57Oh, sorry. Cisco CEO, of course, Chuck Robbins joined us earlier on Squawk Box. Weighed in on NVIDIA's interim CEO, CollectCrest last hour. This is the follow-up from Jensen Wong's resignation grows this morning. The stock, it's not about 4%. Reuters reporting, by the way, that there was a relationship between the former CEO and another NVIDIA employee. Commerce Secretary Howard Lutnick also has reportedly agreed to testify to Congress about chip sales to China, which, of course, is a central part of a lot of things we still don't fully understand yet involving NVIDIA. Our next guest is out with an op-ed in the New York Times arguing Jensen Wang's downfall is bad for NVIDIA, but good for the United States.

23:38Let's bring in Alex Kentrowitz. He's founder of the Big Technology Newsletter. He's also a contributor right here at CNBC. All right. Why good for America, Alex? Well, if you look at the position that the USAI Labs are in right now, they have Chinese AI Labs breathing down their necks. The consensus is that Chinese AI is about six months behind the U.S. frontier. And not only that, it's typically cheaper and more customizable. And what is the thing that's been propelling Chinese AI? Now they have good researchers. They've distilled a little bit from U.S. models, which is a vulnerability that OpenAI and Anthropic are looking to close up.

24:13And have started to close down on Anthropic, certainly. To the tune of a lot of money that they're going to be missing out on. But I would say the biggest thing that's enabled them to do that has been this flow of NVIDIA chips into China. And with Jensen gone, Jensen has been the number one advocate and the most effective advocate for keeping chips flowing into China. It's going to be much more difficult for these Chinese AI labs to maintain the pace they've been on, which is going to be like a surprising boon to the open AIs, Anthropics and Googles of the world. Yeah, it's funny. We made that point recently that it could be a positive for the frontier labs because, I mean, not just chips, but open source as well has been something that Jensen Wang has very much been focused on.

24:50Yeah, that's right. I mean, open source, you know, it is the number one thing that's been risking commoditization for the big AI labs. And it's bearing out in the data. During September, if you looked at the stats on OpenRouter, which is a model switching platform, which has been in vogue recently because people don't want to spend that much on the frontier labs, something like 57 to 67 percent of all tokens spent through OpenRouter in that week in September went to Chinese models. And so if you're a model company like OpenAI and Anthropic, the way that you maintain your competitiveness is making sure that percentage of spend going to Chinese labs goes down.

25:28And they've been delivered a gift this week. So do you think that's the result of external pressure on what was a priority for Jensen or some kind of internal shift in strategy? It could be a little bit of both. But the China Hawks are really licking their chops this week because they are a powerful force in Washington. and they have been met with great resistance from the president and from Jensen. They've both stymied their agenda. But it's not other people back to this idea that Jensen made, which is wouldn't we rather have the world build their AI platforms off of U.S. infrastructure, chips and software and networks?

26:05We don't want Europe, first of all, China will create its own NVIDIA. They're doing so in Huawei. And we don't want all the other countries in the world building off of that one. It's key to us winning the ARI race. Yeah, no, it's not a crazy idea. And I've heard Jensen make that argument multiple times. The one thing I would say is if you look at where China is, you know, the United States has been like, let's keep giving them chips and they'll be on our system. They're six months behind. And if you think about the security risks that you have, we just had this hugging face incident. Imagine China has the capabilities to do zero days with swarms of agents using frontier cyber models in about six months.

26:41It could be a security risk. So that's from the security side. And then if you're just thinking about national competitiveness, opening I and Anthropic, there's no way to argue that they won't be better off without the Chinese labs having access to NVIDIA chips. There's a reason why they went through such lengths to get these NVIDIA chips. Yeah. Listen, I don't know the answer to this. I don't know that you will, but I'll ask it anyway. I mean, what do you think was motivating Jensen? Because there is a case that says all he was looking to do was sell as many chips as he possibly could. He was a proponent of open source in part because that would even mean he got to some more chips.

27:12He wanted open source to be as good as possible. There could be a more nefarious view of it, I suppose. What's your take? I'm with the consensus view on this, and that's the view that's held throughout Silicon Valley, which is Jensen has been motivated by one thing, and that's selling GPUs. And if you think about his career arc, he was doing this for decades. No one was paying attention to him. No one knew who Jensen was. And then all of a sudden, he rose to fame. Now, of course, it was a technology story, but it really was a business story. The fact that he was able to grow NVIDIA and turn in these crazy quarters.

27:44And I think he just he he he started to get consumed by the pressure to continue to deliver quarter after quarter. And maybe if it wasn't going to come for the United States, he just needed to look globally. And that was ultimately there's another argument there about why it might not be good for America, which is because of his he is a technologist as well and a leader. And they kept churning out next generation ships at a pretty quick pace. and he was the dealmaker in charge of doing that. I mean, if we don't have that, America loses a competitive edge. No doubt. I'm so glad you brought that up because obviously I don't want to shortchange the technology story here.

28:18The NVIDIA technology has been core to the AI revolution. There's no doubt about that. But it's happening at such a very interesting moment, this moment with Jensen, which is that the competitors to NVIDIA are starting to get really strong. AMD, Google, even Amazon. OpenAI is designing its own chip. these competitors are actually being boosted by AI technology. Because if you think about it, Anthropic, they just had this amazing slide that they showed in their roadshow where they said previously it would take them like 6 to 12 months to get ramped up on an AMD chip, which they're just starting to use for the first time.

28:56Their technology has now given them the opportunity to start using AMD chips in three days. And the software side of this, the CUDA software that NVIDIA has had, has been the biggest moat and honestly, one of the bigger innovations. But ironically, AI is now helping erase that moat that NVIDIA had and allowing companies like Anthropic to innovate on top of other chips. The exponential, it just things continue to just increase in speed. You look at the charts and you're like, this can't possibly keep going. I remember being with Dario in July last year in San Francisco, and he told me, look, Anthropic was at a billion dollars of revenue last year.

29:33We're at$4 billion now in July 2025. We might be at$10 billion at the end of the year. And maybe, you know, if you keep going, we could potentially do$100 billion. And now I'd heard stories like this from tech CEOs from the beginning, from the moment I started speaking with them. And I've learned to not believe them. And I was like, okay, Dario, sure. And they've pulled it off effectively. It's stunning. And we haven't even gotten a recursive self-improvement yet. Yeah. All right. That's a conversation for another day. Alex, thank you. Thank you so much. Kentsowitz. Did want to also take a look at some of the other things going on around NVIDIA, particularly on social media.

30:09Brad Gerstner, of course, runs Altimeter, huge proponent of the stock for a very long period of time, and rightly so, of course, given its incredible performance over a long period of time. No surprise, Gerstner took to social media to support, essentially, the company itself. This is the end of what was a rather long post. Not spinning this is happier. Good news. Just offering a dose of realism. Silicon Valley, not run by 10 rock stars. Founders are essential, but the great ones attract legends in their own right who compound their magic. Thousands of people are driven by a mission bigger than all of us.

30:42And he went on to talk about the fact that in that way, NVIDIA is going to obviously be just fine. But that was followed or also included by another member of his firm, a gentleman named Clark Tang, who, by the way, has appeared with Gerstner when they have been with Jensen Wong putting out the following that is kind of freaks some people out. I think the world market is not prepared for the aftermath of today's events. Time will tell, but timestamp me and troll me if everything from here is handy dandy. Works at the same firm, also has been in, there it is, that's the gentleman I'm talking about.

31:18I'm talking to Jensen during one of their interviews on Brad's podcast. And I don't know what it means. Well, Altimeter is a significant shareholder in NVIDIA. Correct. I mean, according to the latest filing, over 8 million shares, one and a half billion dollars. It has been for a long time and obviously a somewhat unique relationship there as well. Here's Clark talking. But again, some people have taken note of that social media post just sort of saying, what do you think it means? I don't think it sounds good. Dark. It's kind of dark, right? I think the world market's not prepared for the aftermath of today's events.

31:54But I don't know, Carl. I do think it's interesting that the VC community and the NVIDIA backers and shareholders have kind of come out. I mean, Brad's take is a little bit different from what we've heard from, you know, the Gavin Bakers and some of the others. Sequoia, Sean McGuire's. Which, you know, criticizing the board for not following through with the investigation, not giving him a shot, a fair shot here. A fair shot? What does that mean, not giving him a fair shot? I don't understand what that means. To prove, basically to evidence that of what actually happened, what he knew about, you know, the extramarital affair, what if there were any secrets given, if there were actually lies to the board, those types of things.

32:35Well, first of all, we don't know that. We don't know that. I mean, it may have been, and I said this on Monday, I mean, if you lie to your board, they're in a position where they have to figure out whether they want to. And Gary Cohn spoke specifically to that. And so we just don't know, Sarah, whether that, in fact, was the case. And they were able to immediately figure that out. Right. And then the other argument is that it's better for U.S. competitiveness to have Jensen and China wins if Jensen loses. And so that's sort of a heavy consideration as well. Yeah. There's been a lot of evolving views since Sunday.

33:08across Silicon Valley, that's for sure. Still ahead, what the fallout does mean for competitors. We'll hear from Cerebras today, jumping this morning on earnings. Plus, we'll look at what's behind this drawdown in Bitcoin. Below 70K now, a 68 and change. That's down 20 % from the September high. Stay with us. Hey, what's up, guys? It's Haley Bailey. Okay, I need to tell you about something. I just got YouTube Premium. It's got tons of awesome features like offline downloads, so I can download my favorite videos before I travel and watch them whenever I don't have Wi-Fi because we all know airplane Wi-Fi is the worst.

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35:00Time now for a CNBC News update. Contessa Brewer has it. Morning, Contessa. Good morning, Sarah. Maryland Democratic Senator Chris Van Hollen says he'll run to become the next Senate majority leader. That would be a challenge to New York Democrat Chuck Schumer. Van Hollen says midterm voters called for, in his words, a change from the status quo that isn't working for working people. In a statement of his own, Schumer says he has the votes to continue serving as the Democratic leader. Bank overdraft fees jumped 9 percent in the third quarter to more than one and a half billion dollars, according to calculations by Reuters.

35:32It's the highest amount in four years. Some economists warn that could be an early sign of a deterioration in consumer health. And the U.S. national soccer team needs a new coach. Maurizio Pecchettino, who led the U.S. to the quarterfinals in the World Cup over the summer, will take over at Manchester United, which is in second to last place in the English Premier League. And it's the team's worst start in 40 years. Good luck to him. Carl. Nowhere to go but up. Thanks, Contessa. Contessa Brewer. Still to come, Jensen Wong and Commerce Secretary Lutnick summoned to testify on the Hill over the NVIDIA fallout.

36:12We'll get the latest from D.C. Plus, we'll get to this move for NVIDIA competitor Cerebris, a big winner on the back of results, although off of the session highs, Andrew Feldman will join the show in the next hour. Squawk on the streets back in a minute. Welcome back. Jensen Wong and Commerce Secretary Lutnick have been summoned to testify before Congress. This is the fallout from Jensen Wang's affairs, Wydens. Eamon Javers is in D.C. He's been following in the story for us. Eamon. Yeah, David, good morning to you. There's a real split now inside the Trump administration over how NVIDIA's partner Megaspeed was treated by the U.S.

36:45government and whether more scrutiny should have been placed on the potential for illegal shipments of advanced chips to China. Treasury Secretary Scott Bessent was on CNBC this morning and pointed the finger directly at the Commerce Department, which, of course, is run by Secretary Howard Lutnick. I can tell you there was coordination. Treasury, War, USTR, and State, they were in favor of putting Megaspeed on the entity list for months. But Commerce has the pin. Commerce BIS has the pin. And you will have to ask them about their internal proceeds. to comment about the scandal publicly, but he is now scheduled, as you say, to testify about all this on Capitol Hill in December.

37:30That announcement came amid a swirl of news reports that senior Trump administration officials are considering Lutnik's future at the Department of Commerce. The White House released a statement yesterday saying the president still has confidence in him. But I want to also flag for you guys the importance of something that Secretary Besson said this morning. He said, the real question is, what did NVIDIA know about pass-through shell companies? And that's important because did anyone at NVIDIA know, he said, they should be held accountable if they did. So it's clear that the U.S. government is not going to let this go.

38:04And we know that short sellers, at least, view these illicit sales as potentially a significant percentage of NVIDIA's revenue. So new management is going to have to clean that up. And it seems clear that's going to meet less revenue for NVIDIA in the future. The question, of course, is just how much less that's going to be, guys. Back over to you. Set up Eamon Javries this morning. For more on NVIDIA and these upcoming testimonies before Congress, let's bring in Sarah Bianchi, Evercore ISI Chief Strategist of International Political Affairs and Public Policy. Sarah, welcome back. Thanks for being with us.

38:39Thanks for having me. So we had Besson on this morning. That was kind of spicy. And now I'm reading the journal op-ed page and Peggy Noonan. The headline is Jensen Wong is a White House scandal. See the scandal for what it is, potentially teapot dome size, Watergate size. Is that how you're thinking about it? Wow. Well, look, there's a lot of concerns here on national security grounds. And obviously the leaking and such and even Besson's comments, don't give you a lot of comfort here. If they were told to be putting these companies on the entity list and didn't, that is a real concern. And why didn't that happen?

39:21Look, Nafini has been really aggressive in Washington for a long time. But it appears here that, you know, obviously went overboard. And I think there's going to be a lot of questions from Congress and beyond. Yeah. And that, I guess you would argue that works across both parties. And then I wonder, you also make the point that maybe Stephen Miller, as chief of staff, adds another China hawkish voice. I think that's right. So remember that the China, U.S.-China meeting is next week between President Xi. And while it will be polite and cordial, behind the scenes there's a lot of questions. Congress is asking about escort controls.

40:00The Busan Dutant is already rather fragile. And, yes, Stephen Miller is another hawkish voice in the room. and Lutnik, at least I think, will have a diminished voice. And so I think this means 2027, the U.S.-China detente could be under a lot of stress. I mean, Sarah, what's not clear, though, is where the White House stands on the policy of exporting these advanced chips to China in the wake of what's happened with Jensen-Wang. There's no indication that they're changing, is there? Well, I think, quite frankly, they're going to have to after these events. I think last year they were persuasive in getting Congress to take some of the export control provisions out of the National Defense Authorization Bill.

40:49I think that's going to be a lot harder. So I think what's probably going on right now is the White House and the USCR are negotiating behind the scenes with the Chinese because something is going to have to give here. Obviously, they don't want an escalatory situation, but I'm not sure Republicans or Democrats are going to see something pass without tighter controls. OK, I'm just trying to understand the power dynamic. I mean, if the president really has not necessarily favored significant controls, where is the pressure coming from? Is it state? Is it I don't know. I'm just sort of curious as to how you see this dynamic and or whether he's just going to have changed his mind on it overall.

41:27all? I think, first of all, like, it does appear that the president signed off on some things that didn't happen. I do think public pressure. I mean, I don't think Congress, I think Congress, this is very, very bipartisan. So, you know, these bills, some of these export control bills were already in Senate, NDAA and other things. So I just think sometimes life events overwhelm things. I'm not sure the president. Look, we just had an election talking about corruption, talking about people benefiting. This is not a good look. So I'm just not sure he's going to be able to ride the storm. If he really wants to veto the NBAA bill, I guess we'll see.

42:10But I think it's going to be harder to stop. And again, like like we pointed out, I'm not sure Stephen Miller is going to want to stop. Sarah, really interesting as we work our way closer to that that December date. Hope we get to talk between now and then. Thanks, Sarah Bianca. Thanks for having me. Great. All right, when we come back, we're going to look into what is behind the move in Bitcoin. Tough week, down 10 % so far. Crypto trading below 70 ,000 for the first time since early August. Also, don't miss an exclusive interview with the CEO of Estee Lauder on the company's turnaround strategy, what he's seeing from the consumer.

42:45First time that he is speaking since taking over as CEO almost two years ago. We'll be right back. Welcome back. Some pressure on tech and early trading here this morning as the VIX, the volatility index, spikes. The Nasdaq 100 is down 2 percent, dragged by neocloud names like Nebius and CoreWeave. Chips also getting hit hard, including AMD, SanDisk and Marvell. We're also watching Bitcoin this morning as losses accelerate now below 70K for the first time since August. It's on pace for its sixth straight losing week. Some of the pressure reportedly coming from the forced closures of the leveraged Bitcoin positions.

43:18It's hard to know exactly what's moving Bitcoin. It tracks off in the NASDAQ 100, so risk off doesn't help. And by the way, not that there's a great correlation here, but the U.S. dollar has been marching higher, as we've seen. And some people look at it as a dollar alternative as yields have been elevated. OK. As you take a look at the dollar index there. By the way, the best week in two months on the Bitcoin. DXY. When we come back right here, what led to that Microsoft outage impacting millions around the globe? what we know at this hour when Squawk on the Street comes right back. Welcome back.

43:50Many parts of the Microsoft suite are now coming back online. This after widespread outages impacted millions of users around the globe. Kate Rooney joins us now and she has the latest for us. Kate. Hey, David. Well, Microsoft now says it's making progress restoring Outlook services this morning after an outage disrupted email and other workplace tools around the world, including at CNBC. You couldn't reach us yesterday. You know why? The company says As email delivery and service availability are improving, some customers may still see issues. They do say that engineers are working through what they call a backlog of emails as well.

44:26It did come back online this morning Eastern time. So the email disruption started midday yesterday on Thursday, and it did extend well beyond Outlook. It hit Microsoft Teams. They have their AI offering with Copilot and then other Microsoft 365 services. As for what went wrong, guys, Microsoft did say a core process on its servers basically got overwhelmed. So it reduced capacity. Its initial recovery efforts didn't bring the relief that they were expecting. And it did take some time to get that back online. Microsoft says there's no indication of malicious or cyber activity right now. The impact for Microsoft, though, does go well beyond just people's frozen inboxes.

45:08It comes as Microsoft is pitching itself as the go-to office suite. It's got its AI offering within that. So reliability has to be a huge selling point for that. Investors, though, don't seem to rattle. The stock has not reacted much to the news. It's basically flat over the past 24 hours, guys. Yeah. Quick 10 percent correction from the highs, which really wasn't that long ago last week or so, but really interesting around the world. Kate, thank you. Kate Rooney. All opinions expressed by Squawk on the Street participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, internet, or another medium.

45:45You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Such opinions are based upon information Squawk on the Street participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Squawk on the Street disclaimer, please visit cnbc.com forward slash Squawk on the Street disclaimer. The real cost of a break-in isn't your valuables. It's the feeling that your home stopped being safe.

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